TAX INCREASE
Estimating the tax increase.
The precise tax increase can only be very closely estimated at this time. We do, however, believe that our estimates accurately indicate the tax increase that would accompany the passage of the proposed bond issuance at the upcoming election in May.
The reason that we can only estimate the tax increase at this time is fairly straightforward. The precise cost of paying back the bonds is dependent upon the rates of interest at the time that we sell the bonds. Because we already have a little more than half of the funds for the project in hand, we wouldn't necessarily need to sell the bonds immediately after the election. We could wait until interest rates drop a little, or we could wait until we need the cash to make payments towards the project in an effort to defer the amount of interest that we'll pay. We'd anticipate selling the bonds in June at the earliest and in December at the latest. Our goal would be to sell the bonds at the most advantageous time - i.e. locking in a lower interest rate, or waiting to liquidate the bonds for the purpose of saving on interest expense.
We do not anticipate a great deal of change in interest rates over the next 9 months, or at least we don't anticipate a large amount of upward pressure on interest rates in that period of time. We are currently utilizing a range of interest rates (4% to 5%) with mixed maturity dates to calculate our costs of paying back the bonds that we'd sell to finance the project. Over the long-term, we also reasonably anticipate having the opportunity to refinance some, or all, of the bonds at least one time at a lower rate of interest for the purpose of saving on total, aggregate interest costs.
The following estimates are based off of current-year valuations & tax requests, as well as current bond market conditions.
Increase to the annual tax request for the Bond Fund: $495,000
Increase to the levy rate for the Bond Fund (based on current-year LB2 bond valuations): $0.06598
Note: LB2 changes taxable valuation applied to agricultural / horticultural lands from the standard 75% of actual value to 50% of actual value for repayment of bonds approved after January 1, 2022.
For residential or commercial properties, here are some examples of the annual Bond Fund tax increase:
Residential / Commercial Property; regular taxable value assessed at $150,000 - annual gross property tax increase: $98.97 ($8.25 per month)
Residential / Commercial Property; regular taxable value assessed at $300,000 - annual gross property tax increase: $197.94 ($16.50 per month)
Residential / Commercial Property; regular taxable value assessed at $500,000 - annual gross property tax increase: $329.90 ($27.49 per month)
For agricultural or horticultural properties, here are some examples of the annual Bond Fund tax increase:
52 acres (irrigated); regular taxable value assessed at $356,200 - annual gross property tax increase: $156.68 ($3.01 per acre)
80 acres (irrigated); regular taxable value assessed at $548,000 - annual gross property tax increase: $241.05 ($3.01 per acre)
159 acres (irrigated); regular taxable value assessed at $1,089,150 - annual gross property tax increase: $479.08 ($3.01 per acre)
Note: all property tax increase amounts (listed above) are gross property tax increases and do not deduct any property tax credits that are applied on tax statements to calculate the taxes due.